1. (S) Summary: Prime Minister Helen Clark has assented to a request by the Inspector-General of Security to conduct an investigation into allegations reported by the New Zealand media that New Zealand's Security Intelligence Service (SIS) has been spying on members of the newly formed Maori Party. The reports were attributed to anonymous whistleblowers in the New Zealand Security Intelligence Service, at least one of whom has since been identified as unaffiliated with the SIS. The alleged spying ("Operation Leaf") supposedly gathered political intelligence on Maori through wiretaps and computer hacking. Embassy Wellington RMAS dismisses the allegations; SIS contacts insist such domestic monitoring was discontinued a decade ago. Some monitoring of Maori criminal groups may continue, but is conducted exclusively by the police service.

PM Clark has vehemently denied the allegations and thus far avoided political fallout, but has allowed an investigation by an independent supervisory body to proceed. End summary.

2. (U) Since November 21, New Zealand media have been reporting allegations that New Zealand's Security Intelligence Service (SIS) has been spying on members of the newly formed Maori Party. Three dissident "SIS operatives" have claimed to local media that they had been assigned to monitor domestic Maori groups in New Zealand in order to get intelligence on tribal divisions, finances, and treaty claims and in general to get "dirt" on those targeted. The PM called these claims a "work of fiction" and challenged the three spies to make their complaints through proper channels if they were to be considered credible. One of the "spies" has been identified - New Zealand citizen Jack Sanders (aka James Thomas Stubbs). Sanders has been described by a NZ Police spokesman as a subject of interest by the Police for "dubious activities" in Asia.

3. (U) While PM Clark, who is also Minister for the SIS, has vehemently denied the allegations, she has assented to a request by the Inspector-General of Security, Justice Paul Neazor, to conduct an investigation. This assent may be linked to a letter of complaint from political rival and Maori Party co-founder Tariana Turia to Neazor. Turia told the press that her phone was bugged while she was leaving the Labour Party, although she also admitted that a private security firm she hired at that time told her it was unlikely SIS was involved. Turia also spoke with SIS head Richard Woods and stated that she has accepted his assurances her Maori Party was not a target.

4. (S) Post's RMAS spoke with SIS contacts, who stated that the press claims are not credible. They further stated that the SIS had monitored Maori groups in the past when they were considered a possible national security risk, but stopped doing so at least 10 years ago. In fact, when the RMAS asked SIS last year if they were looking at Maori groups in the wake of press reports that some Maori were embracing radical Islam, SIS said no, as they thought the police were doing an adequate monitoring job.

SIS Background
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5. (S) The SIS is one of four key elements in the GoNZ's security structure, which also includes the Government Communications Security Bureau (GCSB), the NZ Police and the NZ Defence Force's special forces. These organs are coordinated by the Domestic and External Security Committee, based in the Department of PM and Cabinet. The SIS is akin
to both our FBI and CIA and spends about 90 percent of its resources on domestic security issues. (It was authorized to conduct overseas operations in 1996.) Its focus is on internal issues involving counter-terrorism (CT), counter-proliferation, counterespionage and organized crime, and it is just completing a restructuring plan in preparation for requesting more CT funding. Neazor's investigation will be the first into NZ's counter-intelligence services since the 1996 reforms.

Comment
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6. (C) The initial newspaper article, written by strong anti-Western columnist Nicky Hager, exploited public stereotypes with its allegations of a security apparatus running roughshod over civil liberties and with its overtones of racial profiling ) targeting law-abiding Maori. However, Clark's decision to allow an inquiry should effectively stem any political fallout for her Labour Government, especially as further press reporting continues to undercut the media's initial claim.